Recent developments in the US suggest it might be time for Australia to rethink its reliance on private prisons.

For more than 30 years governments around the world have outsourced the management of prison populations. This trend has been enthusiastically adopted in Australia, which has a higher proportion of inmates in privately operated prisons than any other country.

Yet recent developments in the US – involving some of the same contractors who operate private prisons in Australia – suggest it might be time to rethink our commitment to these prisons.

In a major policy turnaround, the US Department of Justice recently announced it will immediately reduce, and ultimately seek to end, its use of privately operated prisons. The decision followed a review that concluded these prisons were less safe and less effective than other prisons and should be phased out.

Why private prisons?

The first privately managed modern prison opened in 1984 in Tennessee. This development was a response to a surge in America’s prison population fuelled by the “War on Drugs” and harsh sentencing practices (including the extensive use of mandatory minimum sentences).

The consequent burden on existing prisons generated a demand for the construction and management of new prisons to hold these prisoners. State and federal authorities turned to the private sector, which promised quickly constructed prisons that would be more efficient and cost-effective than government-run facilities while still offering the same quality of service.

Despite some commentators expressing significant concerns about how for-profit companies would deliver effective staffing and rehabilitation programs, governments in Australia and elsewhere embraced the possibility of cheaper prisons managed by private corporations.

Australia’s first privately managed prison, at Borallon (near Brisbane), became operational in January 1990. It was managed by Corrections Company of Australia, a consortium equally owned by the Corrections Corporation of America, John Holland Construction Group and Wormald’s Security Ltd.

Private prisons in the US

From 1999 to 2010, the number of inmates held in private prisons in the US increased dramatically. While the overall prison population grew by 18%, the number of persons held in private prisons grew by a staggering 80%.

But a change in criminal justice and sentencing policies introduced in 2013 by the Obama administration resulted in a decrease in the federal prison population. Less harsh sentences for low-level, non-violent drug offenders as well as retroactive sentence reductions for some convicted drug offenders contributed to this decrease.

And despite the dire claims of Republican presidential candidate Donald Trump, the US is experiencing comparatively low crime rates.

A reduced federal prison population means government-operated prisons have the capacity to detain these inmates, with less reliance on private providers.

Immigration detention centres: a growth area?

The US Department of Justice’s announcement caused a significant drop in the share prices of the two main private prison operators, the Corrections Corporation of America and the GEO Group. But their share prices soon rebounded.

The rebound is not surprising. These companies had already been diversifying into other criminal justice sectors, including electronic surveillance, parole and prison transportation.

Significantly, their activities extend to operating private prisons in other countries, including Australia. The GEO Group has been involved in running Australian prisons for more than two decades.

And, just like Australia, some of these companies are also involved in immigration detention. More people are detained in privately run immigration detention centres in the US than in federal prisons.

Operating immigration detention centres is a growth area for private providers. The US government recently entered into a US$1 billion contract with the Corrections Corporation of America to build and manage a centre in Texas to hold women and child asylum seekers from Central America.

Unsurprisingly, reform groups and immigrants’ rights organisations are agitating for these privately run facilities to be closed too.

What will the impact be?

The Department of Justice’s decision affects only 13 prisons in the US federal prison system, which hold about 23,000 prisoners.

It won’t affect the vast majority of the 2.2 million people imprisoned in the US, who are mainly held in state prisons and local jails. Thus, the number of prisoners directly affected is miniscule.

The decision also won’t deal with the grave concerns about how these corporations manage the immigration detention centres for which they are increasingly being given responsibility. It seems concerns about safety, security and cost-effectiveness – the drivers of the decision to end private prisons in the federal system – are not as significant when the detention of non-US citizens is involved.

So, it is unlikely this marks the beginning of the end of private prisons in the US. But it provides further evidence that privately operated prisons are not necessarily more cost-effective than those managed by governments. This marks a significant reversal of policy and may re-ignite debate about whether private corporations have a legitimate role in the detention and incarceration of people.

As evidence mounts about human rights abuse in privately operated detention centres in Australia, it’s a debate we should be having.